Electricity industrial organization : What about the strategic behavior of hydro and thermal operators ?

Abstract

In this paper, we develop a two-period model where we analyze and compare a hydro/thermal electrical system under different industrial organization: monopoly, Cournot competition and collusion; under storage constraint, water availability constraint and thermal turbine capacity constraint. First, we prove that the technological complementarity have an important role in the satisfaction of electricity demand in the different industrial organization. Second, by the analytical resolution, we show that inter temporal private monopoly water transfer from off-peak season to peak season is not high as the same transfer under a public monopoly and therefore this increases the power price. Under Cournot competition, an increase in the peak season implies a water transfers from off peak season to the peak season. The results of collusion depend on availability of water resource and the demand parameters. The results of collusion depend on availability of water resource and the demand parameters.